Reverse Mortgages Will Help 62 and Older Stay in Home Create Cash Flow

Mortgage Rates Lowest In Weeks

Mortgage rates fell today following a tame read on inflation as well as the announcement of Rex Tillerson's departure from the White House.  The Consumer Price Index--the most widely followed economic report on consumer-level inflation--showed prices moving up 0.2% in February (rounded up from 0.1501%).  The median forecast called for a 0.2% increase.  

When inflation is falling (or rising more slowly), it tends to benefit bond markets, thus pushing rates lower.  Given that the inflation data was fairly close to forecasts, it didn't have any sort of extreme impact today, but it added some downward pressure on rates.  The Tillerson news came out a few minutes later.  Markets reacted as they typically do to news that creates uncertainty with stocks and rates moving lower together.  But since Tillerson's departure wasn't a huge surprise, it too failed to cause a profound move lower in rates.  

Even then, we have to separate the intraday rate movement that exists in bond markets from the 1-3x per day rate sheet changes from mortgage lenders.  As of this afternoon, most lenders are still on their first rate sheet of the day.  Even so, those rates had improved enough to make them the lowest in more than a week.  That said, many borrowers will still see the same NOTE rates as yesterday with the improvement coming in the form of lower upfront costs or a higher lender credit (aka, lower EFFECTIVE rate, not lower NOTE rate).

Posted by Anne James on March 13th, 2018 4:42 PM

Mortgage rates moved lower today--somewhat significantly relative to recent examples--ultimately hitting the best levels in more than a week for most lenders.  Trump's tariff announcement served as a catalyst for market movement in both stocks and bonds (which underlie mortgage rates).  Investors currently view the proposed tariffs as something that would do more harm than good for the overall economy.  Economic growth generally corresponds with rising rates, so anything that calls it into question can have the opposite effect.

It's too early, at the point, to know if the tariff-related news will be a big deal for rates apart from today's headline shock value.  What we do know is that rates are officially putting up their best fight so far this year when it comes to pushing back against the dominant trend (the one that's carried average mortgage rates more than half a point higher).  While many lenders aren't in much better territory than Monday morning, lenders who released updated rate sheets this afternoon are in the best shape in more than 2 weeks.  We haven't been able to say "2 week lows" since early December.

Loan Originator Perspective

Bond markets posted modest gains today, but still remained below Monday's levels.  We may be establishing a new range here, which would certainly beat rates continuing higher.  I'm not ready to contemplate floating deals yet, since there's no apparent motivation for yields to fall, but at least we're not posting daily sell-offs either. Ted Rood, Senior Originator

We might actually have 2 green days in a row in the bond market.  It has been a while.  Bonds have still not broken any important levels, so i continue to favor locking.  I would wait until as late as possible as reprices for the better are a possibility. -Victor Burek, Churchill Mortgage

Today's Most Prevalent Rates

  • 30YR FIXED - 4.5-4.625%
  • FHA/VA - 4.375%
  • 15 YEAR FIXED - 3.875%
  • 5 YEAR ARMS -  3.5-3.75% depending on the lender
Posted by Anne James on March 2nd, 2018 10:13 AM

Adjustable-rate mortgages (ARMs) allow borrowers to pay lower interest rates on their loan for a set period, after which the rates get changed. The 7/1 ARM means that for seven years the borrower’s interest rate will remain fixed. That’s a clear advantage the 7/1 ARM has over other ARMs with shorter fixed-rate periods.

Get a good rate on your mortgage using Bankrate’s mortgage calculators.

However, they also run the risk of potentially higher mortgage payments at the end of the seven years. Whether the rates increase or decrease is determined by

  • Indexes: ARMs are tied to an index of interest rates like the London Interbank Offered Rate (Libor).
  • Margins: The margin, established at the time of the loan approval, remains fixed for the entire loan. For example, a margin could be set at 3 percent, meaning the interest rate charged could be as much as 3 percent higher than the index.
  • Caps: ARMs usually have a lifetime cap that establishes a maximum interest rate and a periodic cap that sets a limit to the amount the interest rate can change in any one adjustment period.

In years when interest rates are low, ARMs are less popular than fixed-rate mortgages. When the opposite is true, borrowers prefer to risk a higher rate in the future in exchange for reduced interest payments now.

Posted by Anne James on October 17th, 2017 1:39 PM


My Favorite Blogs:

Sites That Link to This Blog:

Reliance Mortgage Service, Inc

NMLS# 254859 DRE Lic # 0019139